An Evolutionary Game for Analyzing Switching Behavior of Consumers in Electricity Retail Markets

Many countries have deregulated their electricity retail markets to offer lower electricity charges to consumers. However, many consumers have not switched their suppliers after the deregulation, and electricity suppliers do not tend to reduce their charges intensely. This paper proposes an electricity market model and evolutionary game to analyze the behavior of consumers in electricity retail markets. Our model focuses on switching costs such as an effort at switching, costs in searching for other alternatives, and so on. The evolutionary game examines whether consumers choose a strategy involving exploration of new alternatives with the searching costs as "cooperators" or not. Simulation results demonstrate that the share of cooperators was not improved by simply giving rewards for cooperators as compensation for searching costs. Furthermore, the results also suggest that the degree of cooperators in a network among consumers has a vital role in increasing the share of cooperators and switching rate.